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Question 28: How do I handle partial Kanban quantities in shortage situations? (Kanban System Design)

For example. An empty storage bin travels to the storeroom for a parts replenishment of 10 pieces. It is only possible to fill the bin with 5 pieces due to lack of inventory in the storeroom. Would one solution be:

Send the bin back with 5 pieces and apply the other 5 to a shortage list? Or.. Hold the bin and wait for a shipment to arrive, then fill the bin to the appropriate quantity and return to the point of use location?

This is based on a 2 week, two bin supply, at the point of use. If all is working correctly the second full bin that has been pulled forward, at the point of use can be relied upon until the first bin makes its way back to the point of use.

Any suggestions appreciated... (name and address supplied)

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Answer

Hello ...

The default position is to only replenish Kanbans fully and solve the supply problem, however there are four key Kanban system design criteria at work here:

1. Type of Kanban system?
2. The Kanban population size in total? (In your example 20.)
3. The transfer batch size (How many items per Kanban)? (In your example 10.)
4. The signal mechanism?

Taking each in turn:

1. The system you have described is in fact a 2 bin system which predates Kanban systems by millennia. (But I will come back to this later.)
   1. If there is one storeroom & to one point-of-use for this item, in the short term, I would send the 5 available rather than risk stopping the downstream process due to a shortage. (In fact ultimately deliver direct to point-of-use bypassing the storeroom.) (See B035: Out Tray Management & Q001 Managing "C" class items in a deliver to point-of-use situation) (This means that the system will cycle more quickly than your designed average one week interval, which you can easily monitor in a low administration way.) (See B009 Visibility of problems through simple and clear processes)
   2. However if this is one storeroom feeding several points-of-use for a common item, I would suggest sending only full Kanban quantities. (You will also need a priority signalling system to tell the storeroom which is most urgent, such as provided in the "Kanban Accumulator" system) (Also see transfer batch size in paragraph 3.)
2. Your last sentence suggests that the that 20 items in the Kanban population plus storeroom stock is inadequate! (We provide a Kanban population calculator in our Kanban training and we will cover this in a future article.) Meanwhile you may need to increase the storeroom stock temporarily to protect your consuming process (& Kanban system) from this. The root cause of your problem is lack of availability. This needs further investigation. In addition, any shortages (inability to honour pull signals) should always trigger expediting activity and a review of the system design parameters. Kanban systems are not "fit and forget", (a common fallacy). You could also add the storeroom stock to your Kanban system and send resupply signals from this enlarged system directly upstream to the storeroom supplier, which might help stabilise supply.
3. However the main thrust of your question is about how many items per Kanban. Conventional wisdom suggests that a container size = a Kanban quantity. However this is only one option! We would normally suggest that the transfer quantity should be the minimum that any logistics constraints will allow (if necessary reducing container sizes). (Ultimately "single piece flow".) (You could start by halving your current transfer batch size, making 4 bins containing 5 items, rather than 2 bins containing 10.) (Converting this 2 bin system into a Kanban system.) For example an average consumption of 20 per 2 weeks = 2 per day (assuming a 5 day week). By reducing transfer batch size from 10 to say 5 you are delivering to point-of-use (& identifying storeroom shortages) twice as often & 2½ days earlier & reducing the risk of storeroom failure to service Kanban requests in full by about half. Also by doing this and assuming the Kanban cycle time & Kanban population remain the same, the buffer available at the point-of-use increases from an average of 5 with a minimum buffer of zero to an average of 7½ with a minimum buffer of 5, significantly reducing the risk of process stoppages. (I used "hand simulation" to calculate this, which we cover in our Kanban & scheduling training and we will cover in a future article.) Another way of expressing this, is that the minimum buffer of 5 could be removed from the Kanban population and held in the storeroom, or if it makes strategic sense, removed from the system completely if the supply problem was solved.
4. I think you are assuming that the empty container is in fact the signal to replenish. Although a common method, which has some other potential benefits, it does not have to be and in one rescue situation we have been involved in, the empty bins were being misappropriated or delayed, causing the shortages! (See B029 Bin Discipline (Labelling, counting, stock rotation, decanting and consolidation)

Also I would suggest you read the additional articles following the links below.

I hope this helps?

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Further Reading: The following further best practice articles were mentioned in this answer:

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Previous Readers Questions

For a copy of up to two articles from our archives please ring us, or request via e-mail quoting the article number and description. (See "Contact us" for details).

Q001. Managing "C" class items in a deliver to point-of-use situation

Q002. What are the weaknesses of Kaizen and how can it be improved?

Q003. ERP software selection in Europe

Q004. ERP implementation: key do's and don'ts

Q005. ERP support cost benchmarks

Q006. Effects of Kanban on Customer Service

Q007. How do you influence suppliers to improve their performance?

Q008. Report writer software selection

Q009. Planning and control in financial services

Q010. Advantages of Agile Manufacturing over Lean Manufacturing

Q011. Software Maintenance (a comparison with garage best practice)

Q012. Do I buy ERP or Best of Breed software?

Q013. On time delivery problems and solutions

Q014. Shop Floor Control (when is it needed)

Q015. Part numbering best practice

Q016. ERP functions required for Shop Floor Control, performance and payroll reporting

Q017. Benchmarking in the electronics industry (Getting Started)

Q018. How do resolve capacity problems?

Q019. When is Kanban not appropriate? Do I need extra equipment?

Q020. We have read the theory, but how do you implement Sales and Operations Planning?

Q021. What are the main components of an Information Systems Strategy, and how do I prioritise the development?

Q022. What is the benefit of "Phantoms" in Bills of Material (particularly in PCB assembly)?

Q023. Manufacturing Strategy (What should it contain and what are the prerequisites?)

Q024. What is a good inventory level and how do I reduce inventory?

Q025. How do I handle uncertain demand?

Q026. Are there situations where JIT is not appropriate?

Q027. Improving a decision system for a time critical process

Q028: How do I handle partial Kanban quantities in shortage situations? (Kanban System Design)

For a copy of up to two articles from our archives please ring us, or request via e-mail quoting the article number and description. (See "Contact us" for details).

If you do not see your topic above, try our other archives at "Previous Best Practices of the Week", "Previous Techniques of the Week", "Previous Malpractices of the Week".

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